Dr Mengi: Tanzanians can participate in gas economy

Tanzania Private Sector Foundation Chairman Dr Reginald Mengi responds to questions after presenting his paper at the 2nd Tanzanian Oil and Gas Conference and Exhibition held yesterday in Dsm.

Dismayed at the sidelining of locals in the auction of natural gas blocks today, the Tanzania Private Sector Foundation (TPSF) yesterday proposed a framework that would ensure Tanzanians benefit from the resource.

Presenting his paper at the two-day Oil and Gas meeting in Dar es Salaam yesterday, the TPSF Chairman Dr Reginald Mengi said people should stop misleading Tanzanians that the country has no local investors capable of investing in the natural gas business.

He pointed out that Tanzanians not only through their government but more appropriately through their Private Sector are bringing their mineral resources (gold, oil, gas etc.) to the table; and, likewise, the foreign investors bring their “rare skills” and vast amount of capital (which is what they have) to the table in agreed proportions.

“This is what partnership is all about…so, this notion of Tanzanians being weak and lacking capital is imaginary and should be discarded,” stressed Dr Mengi saying that minerals are a huge part of the capital.

According to the TPSF chairman, the issue is how the Tanzania Private Sector can be facilitated to access the mineral resources of their country.

“Partnership between Tanzanians and foreign investors can and should be facilitated by government through its declared policy of empowerment and affirmative action (National Economic Empowerment Act m.16 of 2004) and our oil and gas sector presents historic opportunities,” he said.

He said that the most important factor is for Tanzanians to have the capacity to effectively negotiate with foreign partners to ensure balanced partnership agreement.

Concerning the participation of Tanzanian firms, Dr Mengi pointed out this must aim at increasing local participation and develop local capacity towards international competitiveness.

“Local content development on the back of contracts has been identified as the best model to drive capacity building and local participation. This gives an overview of a strategic case and proposed contractual framework which will guarantee that local suppliers in Tanzania participate in this new market,” stressed Dr Mengi.

He said the overall empowerment of Tanzanians to participate in the oil and gas industry is crucial and in line with National Economic Empowerment Policy 2004 and National Economic Empowerment Act 2004.

“The objective is to ensure that we adopt inclusiveness approach to enable Tanzanians and Tanzanian firms to partner with foreign firms at all levels of the value chain – upstream, midstream and downstream.

He noted that the government has developed a natural gas policy which focuses on regulating the mid and downstream activities but it has no link to the National Economic Empowerment Policy.

“This is a serious weakness that should be addressed quickly by all of us. It is important to note that the country has no policy to regulate upstream activities in the oil and gas industry in particular, the allocation of blocks,” he said
He gave a case example of Nigeria which in 2010 through its National Assembly enacted a law titled Nigeria Oil and Gas Content Development Act whose main objective is to ensure Nigerians participate effectively in the oil and gas industry.

Mengi noted that to-date Nigeria has allocated 52% of the 173 awarded blocks to Nigerians and 48% given to foreign companies.

Representative from the Religious Intellectual Committee, Pastor William Mwamalanga faulted the government for making decisions which are not beneficial to the majority of Tanzanians.

He said that there was enough time for the government to conduct a dialogue with the members of the public instead of moving ahead without people’s participation.

Pastor Mwamalanga wondered if there were any efforts to prepare Tanzanians to participate in exploration of gas and people’s participation.

He said it will be a historic moment when individual Tanzanians will own the natural gas blocks in their country.